A growing body of empirical evidence suggests that many households fail to achieve efficiency, in consumption as well as production. While efficiency does not necessarily signal cooperation, an inefficient outcome does indicate that individuals are not cooperating. Moreover, the presence of shared public goods casts doubt on the credibility of harsh trigger strategies, particularly since household members can, and do, frequently renegotiate contracts. Altruism, therefore, both increases the payoff to noncooperation in the stage game and reduces the capacity to punish the other player in future periods if he/she reneges on a cooperative agreement. Similarly, if the wife reneges on a cooperative agreement with a co-wife, the co-wife can punish her harshly in the future, whereas the husband will have more difficulty committing to a punishment that reduces his own utility.
ASJC Scopus subject areas
- Agricultural and Biological Sciences (miscellaneous)
- Economics and Econometrics